HSBC Holdings plc’s Saudi affiliate, booked $93.7 million in provisions for loan losses during the third quarter. “We may see some extra provisions in the fourth quarter but most banks will come clean by early 2010,” said Adnan Ahmed Yousef, president of Union of Arab Banks. Arab banks set aside $3.5 billion so far this year against bad loans.
For HSBC this sounds like the United States. Loan losses mounted since 2007 when HSBC decided to get out in front of the financial crisis by admitting that HSBC Finance, formerly Household Internatioanl, had a serious problem.
Saad Group, owned by Maan Al Sanea, the Saudi billionaire who holds a stake in HSBC Holdings Plc, is also restructuring debt. It owes banks at least $5.5 billion in syndicated loans, according to a document obtained by Bloomberg News.
In July 2009 the Malaysia central bank governor says no systemic risks have arisen in the global Islamic finance industry from problems related to Saudi Saad group’s debt restructuring.
The statement puts HSBC on notice that systemic risks are identifiable, just as they are in the United States. Once one of the biggest subprime lenders, HSBC can be traced back to the root cause of the world financial crisis. Poor lending standards of HSBC’s HFC and Beneficial Finance, operated under HSBC Finance, stemmed from HSBC’s purchase of predatory lender Household International.
HSBC cannot afford to ruin financial markets in emerging nations. While HSBC once proudly stated that the bank would export the so-called “Household Model” very little is said about such plans today.
Related posts:
